For young entrepreneurs, buying a company could be smart play. It is one way to get ahead in the business competition, and once the successful acquisition is done things get easier to arrange the next one. This also leads to the line-up of professional service providers to help in improving the accessing the capital.
If we consider from the business point of view, merging companies in same sector having competing strengths is a no brainer. However, we need to understand that mergers and acquisitions (M&A) is always difficult and challenging. The best way to understand the whole process is by seeking advisory services such as those offered by Generational equity, an investment banking firm that offers financial advisory services to private companies.
What you need to know about M&A
There are certain things you need to know while having the merging of two companies:
1. The acquisition process may take a longer process than expected: You cannot put former competitors together to get them along right from the day one. You need to be careful while managing the reporting lines and understand the signs of tension.
2. Commitment is often short-lived: Never make a mistake of being under the impression that managers will stay committed to the new company for long run. Your competitors might try to take the advantage of merging situation. So it is important you stay prepared for the deal.
3. Always think about the future: Once the deal is done, make sure your staffs consistently think about the future of the newly acquired company. Also, along with managers and team lay down the road map for next coming months for the success. Any innovative idea by the team needs to be nurtured.
4. Customers’ pressure on your mergers: Competitors are not the only who will try to kick you down during the acquisition, but customers might also try to squeeze to get better deals. To avoid this situation, you must convince them early by giving them the best option.
5. Embracing changes is a challenge: When companies merge, employees closely working with the company get attached with it and may not embrace the changes happening.
6. Don’t underestimate the potential accounting woes: If both companies have two different financial year ends, then you should not underestimate the challenge of merging and accounting systems.
Tips for a smoother M&A
To smooth down the M&A process, mentioned below are some tips:
1. Examining your motives: Before getting into merging, ask why you need to merge and what you’ll expect from the merger.
2. Preparing your employees for the change happening: After merging, there can be difference in culture which can be a concern.
3. Setting Common Goals: While having the merger, it is important to have a same page and similar business goals. This will help in getting the best result for reaching the common goals.
Takeaway
M&A is not an easy process. Therefore, it is important to seek legal advice from professionals who understand the entire merging and acquisition system and provide all the details helping to get fruitful result after the deal.